Prospects for Using All-Inclusive Service Price Transparency to Address High Prices for Complex Health Care Services

Abstract

Private insurance prices for health care services in the United States often have high variation across providers and insurers that are not justified by variation in provider quality. Prices were historically difficult or impossible to obtain for enrollees who wanted to consider price information before receiving care. In the past quarter century, public and private stakeholders implemented many initiatives to make service prices transparent and thereby enable patients to price shop. Pursuant to a 2019 Presidential Executive Order, the Centers for Medicare and Medicaid Services established price transparency requirements for hospitals including all-inclusive “service package” price disclosures that include a primary service and customarily billed ancillary services. In this dissertation, I studied the potential for using all-inclusive service price estimates to enable price shopping for procedures with complex billing focusing on gastrointestinal endoscopies (GIEs). I investigated how contextual factors affect the potential effectiveness of all-inclusive service price transparency: (1) how billing variation and clinical uncertainty affect the potential to anticipate all-inclusive service spending, (2) how omitting ancillary services and independent billing entities from estimates of GIE service package prices affect price comparisons between hospital outpatient departments (HOPDs) and ambulatory surgery centers (ASCs) and (3) how GIE spending amounts and utilization characteristics are affected by referring of GIEs within vertically integrated health systems and by endoscopist self-referring. I evaluated 2012-2019 GIE referrals and claims data from insurer Kaiser Permanente Washington (KPWA) in parts of Washington State and northern Idaho where KPWA operates only as a private insurer that contracts with non-KPWA GIE facilities (i.e., where KPWA is not operating as a staff model Health Maintenance Organization that Kaiser Permanente is known for). In the studied KPWA subpopulation, expected and actual all-inclusive service package spending had substantial differences, and regression analyses that I used to forecast GIE service package spending had substantial errors between predicted and actual spending. In all years, HOPDs had higher all-inclusive GIE spending than ASCs and spending increased from 2012-2019 by $1115 at HOPDs and by only $108 at ASCs. Ancillary services and independent billing entity spending was a small portion of total spending, changed modestly over time, and was not sufficiently large that omitting them would make HOPDs appear price competitive with ASCs. All-inclusive GIE service spending was substantially higher for packages preceded by a vertically integrated GIE referral or endoscopist self-referral than packages preceded by a non-vertically integrated GIE referral, which was due to vertically integrated GIE referrals and endoscopist self-referrals being referrals to HOPDs at twice or higher rates than non-vertically integrated GIE referrals. My findings suggest that all-inclusive service price transparency as currently implemented is unlikely to help reduce spending on complex services. To reduce spending on health care services that privately insured Americans might price shop for, stakeholders could explore how to increase private payers’ use of unconventional first-dollar coverage insurance benefits that have achieved substantial savings by increasing use of lower priced providers but have not been widely adopted. Lawmakers and regulators could also consider proposals to cap commercial insurance payments as a percentage of Medicare payments to prevent high outlier prices.